National Grid Transco today reported a 14% rise in annual profits and said moves to sell parts of its gas distribution network were "progressing well".

The company, which joined forces with Transco owner Lattice in a £14 billion deal in 2002, expects final bids for five of its regional networks this summer.

National Grid believes the sale will enhance competitiveness and drive down prices, although it repeated earlier comments that it would only sell up to half of the operation it inherited from Transco.

The group, which posted underlying profits of £1.42 billion for the year to March 31, said: "We will sell no more than four of our networks and will only proceed if those sales maximise value."

Scottish and Southern Energy and United Utilities are among those thought to be interested in the five networks, which transport gas between the main system and homes and businesses in England, Wales and Scotland.

Today's annual results from National Grid reflect the benefit of significant post-merger cost savings and increased revenues in gas distribution.

Despite the adverse impact of weather patterns in the company's United States business, National Grid saw bottom-line profits double to £1.36 billion.

Chairman Sir John Parker described the results as "excellent" and pointed out the company invested £1.8 billion in the safety and reliability of its networks.

He said power cuts in London and the West Midlands last summer were "isolated exceptions" and that National Grid was continuing to help industry regulator Ofgem with its investigation into the incidents.

Sir John added: "Despite these events, our UK electricity reliability performance remains at world class levels - delivering 99.9997% of the energy demanded during the year."

Thursday May 20, 2004